Financial Secretary Paul Chan’s budget reveals an ambitious pivot, but observers ask whether a city that jails journalists can truly foster the creative freedom that drives genuine innovation
Hong Kong Bets Its Future on Being a Source of Original Innovation
Hong Kong’s government has made a striking declaration of economic ambition in the 2026-27 budget, one that goes well beyond the city’s traditional identity as a financial intermediary and logistics hub. Financial Secretary Paul Chan Mo-po stated plainly in his budget speech that the government’s objective is “to enhance our influence as a global source of original innovation” — a goal that represents, in the words of commentator Mike Rowse writing in the South China Morning Post, a seismic shift for a city whose economic model has historically centered on the efficient commercialization and scaling of ideas developed elsewhere. The distinction between these two phases of economic development is fundamental. The first phase — what Silicon Valley thinkers call “zero to one” — involves creating something genuinely new: a concept, a technology, a product that did not previously exist. The second phase — “one to n” — covers the subsequent scaling, manufacturing optimization, and incremental improvement of that original innovation. China’s economic growth model for the past four decades has been heavily weighted toward the second phase. Hong Kong has, in the government’s new formulation, a role to play in the first.
The 15th Five-Year Plan Context
The budget’s innovation ambitions are inseparable from China’s 15th Five-Year Plan, unveiled at the annual “two sessions” meetings in Beijing in early March 2026 and described by Financial Secretary Chan as offering a “golden strategic period” for Hong Kong. The plan explicitly designates Hong Kong as a high-end talent hub, an international financial center, and a node in a national innovation ecosystem that Beijing is determined to develop domestically rather than remain dependent on Western technology. Geopolitical pressure from the United States — through export controls on semiconductors, restrictions on investment in Chinese tech companies, and broader technology decoupling — has accelerated China’s drive for technological self-reliance. Hong Kong is being positioned as a key platform for that drive, offering the international connectivity, world-class universities, and open regulatory environment that purely mainland institutions struggle to provide. Chan announced a new AI+ and Finance+ strategic approach for Hong Kong’s contribution to the 14th plan period, and committed the government to establishing a Committee on AI+ and Industry Development Strategy that he will personally chair. The committee will initially focus on life and health technology and embodied artificial intelligence — two sectors where Hong Kong’s biomedical research capabilities and strong university ecosystem provide genuine competitive advantages. Hong Kong Science and Technology Park is at the center of these innovation efforts.
From Financial Hub to Innovation Source: The Transition Challenge
The transition from being primarily a financial intermediary and “super connector” for Chinese capital flows to becoming a genuine original source of global innovation is not merely an economic challenge. It is a cultural and institutional one. Original innovation — the kind that produces breakthroughs rather than incremental improvements — requires an environment of intellectual risk-taking, robust debate, the free flow of information, and tolerance for unconventional thinking. These are precisely the qualities that the political changes of the past five years have put under pressure in Hong Kong. When journalists are imprisoned for their reporting, when academics must be careful about what they publish on politically sensitive topics, and when civil society organizations disband under legal pressure, the intellectual ecosystem that nurtures genuine innovation is damaged. Critics of the current direction note this contradiction with some force. A city that silenced Apple Daily — a newspaper that asked hard questions about power — is not obviously well-positioned to become a source of the kind of radical, disruptive innovation that has historically emerged from places where freedom of thought is protected. Freedom House Hong Kong report documents the decline of civic freedoms in the territory.
What the Budget Actually Allocates
On the concrete side of the ledger, the budget includes significant investments in innovation infrastructure. The government’s 3-billion-Hong Kong-dollar AI Subsidy Scheme has already approved approximately 30 research and development applications in areas including large language models, new materials, and biomedicine. The InnoHK Research Cluster has funded 16 laboratories specializing in artificial intelligence and robotics. A data facility cluster at Sandy Ridge, with a gross floor area of 250,000 square metres, will boost Hong Kong’s computing capacity significantly. The government is also planning an innovation hub near the northern border with Shenzhen, designed to connect Hong Kong’s research ecosystem with the manufacturing capabilities of the Greater Bay Area. Last year, Hong Kong’s IPO market led the world, with 119 companies raising over HK$280 billion. Enterprises in information technology, biotechnology, new energy, and advanced industries accounted for approximately 70 percent of funds raised — a dramatic shift from the traditional pattern in which property companies and banks dominated IPO activity.
The Honest Assessment
Innovation policy is, famously, one of the most difficult areas of government activity. The history of government-directed innovation programmes around the world is littered with expensive failures and a few genuine successes. The conditions that produce genuine “zero to one” innovation — the willingness to take intellectual risks, to challenge received wisdom, and to tolerate the high failure rates that accompany genuine experimentation — are not easily manufactured by government policy or budget allocations. They emerge from culture, from institutions, and from the freedom that creative people need to do their best work. For Hong Kong to achieve its stated ambition of becoming a global source of original innovation, it will need to do more than allocate funds to research centres and AI subsidies. It will need to nurture the intellectual culture — open, questioning, internationally connected — that produced the world’s great innovation ecosystems. That is a task that cannot be completed from within the framework of a national security law that treats certain forms of thought and expression as sedition. Innovation policy research from academic sources offers perspective on what conditions actually drive technological breakthroughs. The budget is a beginning. Turning that beginning into genuine global leadership in original innovation will require a Hong Kong that is genuinely free to think.
Sin Yu Mak
Business & Consumer Affairs Journalist, Apple Daily UK
Contact: sinyu.mak@appledaily.uk
Sin Yu Mak is a business and consumer affairs journalist with expertise in market regulation, consumer rights, and small enterprise reporting. She completed her journalism education at a respected Chinese journalism institution, where she trained in economic reporting, data literacy, and ethical standards.
Her professional experience includes reporting for Apple Daily and other liberal Chinese newspapers on consumer protection, corporate practices, retail trends, and financial transparency. Sin Yu’s work emphasizes accurate interpretation of financial data and regulatory frameworks, supported by expert commentary and verified documentation.
She has operated in fast-paced newsroom settings where financial misinformation can cause real harm, giving her strong practical experience in verification and clarity. Editors value her ability to translate technical information into accessible, fact-based reporting.
Sin Yu’s authority is reinforced by consistent publication within reputable media organizations and compliance with editorial review processes. At Apple Daily UK, she delivers trustworthy business journalism rooted in evidence, professional discipline, and public-interest reporting.
